Although a vaccine is currently being distributed around the world for COVID-19, the Coronavirus pandemic continues to spell uncertainty when it comes to the economy and people’s finances. To help you navigate your money, here are seven steps you can take to keep your feet on solid financial ground in unpredictable times.
How you spend money is always an important consideration, but it's especially vital in the pandemic. If you haven't been careful with your spending, it's a good idea to reevaluate your habits and priorities. Some of your everyday expenses may already be reduced in the pandemic, like travel, but you should make sure that the money you've saved in one line of your budget isn't going someplace else. To prioritize, you need to ask yourself if there are any costs you can cut back on.
Start by crafting a list of essential and non-essential expenses. Essential expenses are things like rent or mortgage, groceries, utilities, and credit card and loan payments. Non-essential are things like TV apps, subscriptions, and memberships. You can rank each of the non-essential items by importance. This will make it easier to start cutting out expenses that appear at the bottom of your list. While chopping out some of the things you enjoy may be difficult, remember that these cuts may just be temporary.
Once you've reassessed your spending, make a budget that reflects the changes. During the pandemic it's hard to know what might affect your finances in the coming months. By dedicating yourself to a trimmed-down budget, you'll be better prepared for any new changes that may come. Sticking to a budget starts with being aware of how quickly you can spend money and being proactive about reigning it in. It requires you to pay attention to where, when, and how you spend. Try writing down everything you buy for a month to find out where you may be spending unnecessarily. You may be surprised.
It’s a good idea to research financial options that can help you stay stable in the pandemic. There are a variety of sites that offer resources to protect and manage your finances during a crisis, such as the Consumer Financial Protection Bureau (CFPB). The CDC website also offers up-to-date information on the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which provides direct economic assistance for American workers and families and small businesses.
If you have the means, you should also consider securing your finances down the road with a fixed index annuity, or FIA, which can provide you guaranteed income during your retirement. An FIA allows you to contribute a set periodic amount or lump sum, and then your money can grow tax-deferred with an option to receive guaranteed payments throughout your retirement regardless of how the stock market performs.
If it hasn’t already, the Covid-19 pandemic may have a significant impact on your finances. You may feel overwhelmed or helpless. Consider working with a financial advisor, who can assist with planning, savings, retirement, and paying down your debts.